Back in February, the Canadian housing market looked to have hit a wall. The Government had recently implemented a range of macroprudential controls on high loan-to-value ratio mortgage lending, including shorter maximum loan amortisation periods (i.e. 25 years instead of 30 years), and house prices had fallen for six consecutive months according to the Teranet repeat sales index.
Since then, Canadian house prices have struck back hard, with house prices registering four consecutive months of gains (see next chart).
In fact, June’s house price results, released over the weekend, showed house prices nationally rising by 1.0% over the month to a new record high. Values are now 28% higher than their April 2009 low.
Looking at the major markets, record highs were recorded in Canada’s two biggest markets – Toronto and Montreal – where prices rose by 1.4% and 0.6% respectively in June. By contrast, in Canada’s third biggest city and bubbliest (and most supply-restricted) market – Vancouver – prices rose by 0.9% in June but were down 2.8% since values peaked in June 2012.
In real (inflation-adjusted) terms, Canadian house prices have fallen by just 0.1% since peak, with Vancouver down 3.9% followed by Montreal (-0.2%). By contrast, Toronto hit a new high even in real terms in June:
